PSC NEWS RELEASE
Today the Arkansas Public Service Commission (Commission) issued a Show Cause Order directed to Entergy Arkansas, Inc. (EAI).[a] The Commission directed EAI to file a formal response to the Show Cause Order by March 1, 2010. The Commission also scheduled a public evidentiary hearing on the Show Cause Order to begin on March 11, 2010.
The Commission, in its Show Cause Order, said that since 1982 it has been embroiled in protracted litigation before the Federal Energy Regulatory Commission (FERC) and the federal courts in an effort to protect EAI’s Arkansas ratepayers from the continuing efforts to force Arkansas ratepayers to subsidize the cost of electricity in their respective states by utility regulators in other states served by EAI’s affiliated retail electric companies. Despite the laudable efforts of the Commission’s litigation team, EAI’s ratepayers have been forced by the FERC to subsidize Entergy ratepayers in other states, by more than $4.5 billion since 1985.
The subsidy payments were ordered by the FERC to cover a substantial portion of the costs associated with Entergy’s Grand Gulf Nuclear Generator located in Mississippi and to subsidize the electricity production costs of EAI’s affiliated retail electric companies serving customers in other states.
In its Order, the Commission stated, “But for EAI’s membership in the [Entergy System Agreement] (ESA) and in the Entergy System Operating Committee as well as its participation in the Entergy System planning process, Arkansas ratepayers would never have been exposed to such an enormous financial liability.” The Commission also said, “The failure by EAI to take all necessary corrective actions to ensure and protect its Arkansas ratepayers against such continued financial liability could be imprudent.”
On December 19, 2005, as a result of the FERC’s adverse decisions against EAI’s ratepayers, EAI gave its required ninety-six months advance notice of its intent to withdraw from the ESA effective December of 2013.
Further, the Commission’s Show Cause Order found that “the operation and control of the Entergy Electric Transmission System (ETS), including the transmission assets owned by EAI as a fully-integrated and operated transmission system has been the source of major controversy, investigation and litigation for decades at the state and federal regulatory level.” While acknowledging that “there have been a few improvements in the operation and control of the ETS” the Commission concluded that “serious concerns have arisen as to whether the operation of the ETS works to the detriment of EAI’s Arkansas ratepayers.”
Consequently, “with this long and costly background,” the Commission stated that the purpose of its Show Cause Order is “to make clear” that the Commission is opening this inquiry to “conduct an investigation regarding the prudence of EAI entering into a successor ESA as opposed to becoming a stand-alone utility upon its exit from the ESA, and whether EAI, as a stand-alone utility, should join the [Southwest Power Pool Regional Transmission Organization].”
Commission Chairman Paul Suskie, speaking on behalf of the full Commission, warned that, “If the Commission finds that all necessary corrective actions have not been taken by EAI the Commission can and, if supported by substantial evidence, may deny cost recovery to EAI for any costs not reasonably and prudently incurred on behalf of Arkansas ratepayers as a result of EAI’s generation and transmission planning processes or infrastructure improvement decisions.”
Chairman Suskie further said, “It is the Commission’s intention to render a decision regarding the prudence of EAI entering into a successor ESA as opposed to becoming a stand-alone utility upon its exit from the ESA, as well as EAI’s RTO participation by the end of calendar year 2010.” Suskie also added that “In a matter parallel with the Show Cause Order issued today, the Commission will closely monitor to see if Entergy will make any meaningful enhancements to its Independent Coordinator of Transmission (ICT) arrangement in 2010 with filings at the FERC.”